Becton, Dickinson and Company (BDX) Earnings Call Transcript & Summary

Welcome back. Good morning. I'm Larry Biegelsen, the Medtech Analyst at Wells Fargo. And it's my pleasure to host this session with the management team from Becton, Dickinson. With us, we have Tom Polen, Chairman, President and CEO; and Adam Reiffe, Senior Director of Investor Relations. It's a fireside chat. If anybody has a question they want to ask, just raise your hand and we'll come around with the mic.

Tom, thanks so much for being here. Tom, before we get to the Critical Care close, which you announced yesterday, I wanted to ask a couple of high-level questions. So First, Alaris returned to the market about a year ago, which was your top priority for a number of years while that was on ship hold. So talk about now your top priorities over the next couple of years as you think about creating shareholder value.

Sure. First off, we're obviously really excited that we launched Alaris and that couldn't be going better. And then we can talk about that just a moment. The framework that we set out in BD 2025 is going to continue to be our focus. Certainly, as we look at finishing the last year this coming year. And even as we go forward. So the framework of growth, continuing to have a hyper focus on moving BD into faster-growing markets. You've seen us do that systematically. We now have with the addition of critical care a $5 billion health care automation and informatics business across our portfolio. We see the opportunity for that to go to $7 billion by 2030. We can talk about that in a bit. Continuing to drive our shift in technologies to enable new care settings as well as improving outcomes for patients with chronic disease. So our innovation agenda that we've been driving continuing to drive a strong organic portfolio as well as complementing that with inorganic tuck-ins that we've been very active in. We'll continue to be a focus over the next couple of years. That's where again moving into higher growth spaces with BD really phenomenally positioned to a number of really major trends that I just described for us to capitalize on. Second is our simplification agenda. You've seen us develop really strong momentum on the margin side over the last several quarters. That's not something that we just developed over the last several quarters. You're seeing the output of it, but it's something that really is a result of the work that we started at the beginning of BD 2025. Of course, we started by exiting 20% of our SKUs. That was the first step. Next, we started working on simplifying our network architecture and we're on track to reduce 20% of our manufacturing plants. Those, of course, take several years from planning through execution. And so you're just starting to see a number of announcements and news of those consolidations actually happening now. And that's going to continue to drive our gross margin expansion over the next several years. On top of that then, last year, we launched a very transformational program for the company called BD Excellence. And it's really our methodology for Kaizen across the company, it's our business system. And we've been hyper focused in driving that within our operations organization. And this past year, we'll do nearly 700 Kaizens across the company. That's up many, many fold versus last year, and it isn't even something that existed prior to last year BD Excellence. We've now trained over 10,000 associates in the company. And we've been able -- just in the last year, we've reduced waste by 30%. That's continuing to enable our plant consolidations further BD Excellence and just ongoing Kaizens will double Kaizens again next year. And the work that we started in the back half of this year and will scale up next year is beginning to expand BD Excellence outside of operations into the commercial space, into the R&D space, utilizing Kaizen and our BD Excellence programs to do things like accelerating collapsing R&D time lines, driving new product launches faster that focus on driving excellence and everything we do specific tools technologies and mindset. So those will continue to be our focus as we go forward over the next 2 years.

That's helpful. Tom, you successfully divested the diabetes business a couple of years ago. And some investors look at your life science business -- Life Sciences business and say, BD's share price isn't reflecting the value of that business given the peer group trades at a higher multiple than BDX does. What's your view on this?

We always evaluate our portfolio, and we're certainly constantly looking at what creates the most shareholder value. And so you've seen us be very active in portfolio management, as you mentioned, not only the spin of our Diabetes Care business, but also the sale of our V. Mueller business and of course, a number of tuck-ins hat we've brought in transforming that space. And so that's something we're always continually analyzing. There's an opportunity to further maximize shareholder value.

What would trigger doing something like that?

We always look and say, is this business best fit with it or be the best owner for this business? I mean that's the key question, right? From a strategy perspective, from a growth profile perspective, from a valuation perspective. And so that analysis. And again, can you -- does it better fit somewhere else? And does it maximize shareholder value differentially somewhere else. So...

That's helpful. And you just announced the close of Critical Care last night. I think it's...

We did that just for this conference.

Thank you. We appreciate news at the conference. It's one of those deals where I don't hear anybody saying this doesn't make sense. Everyone -- I don't -- maybe everyone -- I don't think everyone is wrong. I was just going to say, but it's just one of those deals where everybody -- we agree that it's a great fit for you. What are your aspirations for that business?

It's a phenomenal team. So we're really happy that Katie Simon is going to continue to run it. I was actually out in San Diego with our team, MMS last week, doing some innovation reviews. And we already have -- it was really exciting to see our prototypes already working prototypes for closed loop between the Alaris pump and the Edwards Hemodynamic monitoring system. I was actually -- earlier in the week, I was down in Florida, visiting with a number of our large customers and health care systems. I had the opportunity to walk to critical care floors, the neuro-ICU, the PICU, the core surgical ICU. And every single one of those hospitals I visited that day, they all had the Alaris pump, and they all had the Edwards Critical Care monitors. And talking to the nurses, hear the stories from one nurse, who had just spent 4 hours the last day just sitting in the ICU, staring at the critical care monitor for 4 hours, and her only job was to keep looking at the monitor and then adjust, reprogram the Alaris pump to try to keep the patient blood pressure in range, which is basically just spending 4 hours just keeping the patient alive by typing into the Alaris pump based on what's here. And when you describe that like the prototype I saw that we have just a completely closed loop system, right? It sees -- it actually makes a recommendation Alaris. We recommend you change the infusion rate to this. You press the button and it auto does it. And eventually, the vision is you don't even need to press a button, right? From a regulatory perspective, that will be the easiest first step. And eventually, it just autonomously does that. And the cool thing is, of course, Edwards has AI already approved that says the patient is about to have a change in some time in the future, right? They can predict that it's about to happen. And so again, looking at where this technology can go, literally being able to see this patient is about to have something happen in 10 minutes, adjust the flow rate from Alaris. And then suddenly, the AI say it's no longer going to happen. I mean it's a tremendous opportunity and every customer we speak to is really excited by it. And that really, as you saw, we called that advanced patient monitoring for a very specific reason. It creates a new platform for us to continue to drive growth in a space that we think we'll see continued technology evolution and create new opportunities. Certainly, application of AI is really exciting, and we're seeing that as a big growth driver for that business.

That sounds very powerful. Can you set expectations of how long you think it would take to start closing that?

We'll share more of that at our Analyst Day next year. It will be -- it's not going to come out at launch. Obviously, we can't start the development in full earnest till we come together. But we have that program funded as we go into next year, and we'll share more about it at Analyst Day.

That sounds good. So let's transition to fiscal '24, which is almost over and '25 and Alaris. Just maybe -- just 2 questions on Q4. First, I think the guidance implies a growth acceleration from Q3 to Q4. It seems like most of that acceleration is from Alaris. Aside from Alaris what are the other pieces that will contribute to sales growth acceleration from Q3 to Q4?

It's a continued strong performance across a number of our businesses. You're seeing continued strong procedure volumes flow through in our procedure-based businesses, businesses, consumable spaces like MDS, Vacutainer, et cetera. Continue to see strong growth in a number of the PI businesses, our surgery businesses, for example, driven by our Tepha, tuck-in that we did several years ago and the shift to reservable mesh that business has been doing phenomenally well for the last couple of years. We expect that to continue. PureWick continues. So it's actually one of the customers I was visiting last week. We're talking about the new female PureWick and the male PureWick, both doing extremely well and we have new launches coming next year there, but we expect urology to continue to see strong growth. We've got assumptions Biosciences stays relatively flat, right, just given macro market dynamics. And as you mentioned, Alaris continuing has a relatively easy comp in Q4 given that we stopped shipping Alaris in September essentially August, September as we got clearance at the end of July, stopped shipping then for medical necessity until we started having the orders come in for the -- so. And as we've talked about with Alaris, we're at $100 million a quarter run rate now. So we got there 12 to 18 months sooner than we expected. When we started the year, we couldn't again be more pleased with the momentum. We're back to the historical run rate on Alaris of $400 million plus a year. We can talk about that further.

Great. Before asking specific Alaris question, just the margins from Q3 to Q4, it's about 150 basis point sequential increase. Talk about the driver and your confidence in that, please.

We've got strong confidence in our margin. As we look at -- a couple of things. One is our costs are basically set, right, on GP, they're done because we know our standards are already set and all the products are in inventories sold in their cost bases. We actually have some modest growth in OpEx in the quarter. So that's well known. And you saw a very strong margin performance in Q3. And as we've been signaling for a while as you look at, I think BD was one of the first 2, you've got the first 2 companies back, it was Boston and BD were the first 2 companies post pandemic to get back to FY '19 operating margin. And the first phase of that journey came about 70% from OpEx expansion -- OpEx reduction, efficiencies that we were driving about 30% from gross margin. And we've been signaling for a while that you can expect to see that flip as we head into FY at the back of '24 and into '25 plus as the impacts of BD Excellence and the work we've been doing on plant consolidation starts to kick in. And so you started to see that happen last quarter. You'll continue to see that happen or you'll continue to see that happen as we go into FY '25. We do expect the majority of our operating margin expansion, which we also feel very confident in our 25% op margin which of course, we were at in Q3 will be over 25% op margin in Q4. That's obviously our commitment to be there on a full year basis next year as well, and we're clearly on track for that. But most of that margin expansion again will come from a gross margin expansion as we look at '25 and several years after that.

That's helpful. So transitioning to Alaris, you talked about being at that $400 million run rate, which is where you were before the ship hold. The Q4 number implies a higher run rate, right, for fiscal Q4. I guess people are trying to figure out how high fiscal '25 could be. I think I threw out $600 million on the call. And I can't remember, but I don't think you blessed that number.

We did not buy -- we did not...

Could Alaris be call it, $500 million next year? I'll try again.

Good that you changed the number. But look, we're not going to give guidance on a specific product line at this point. We'll give some more color on that as we get into our November earnings call. I think at an overall level, though, we couldn't be more pleased with the momentum in Alaris clearly, customers waited for Alaris to come back. It's an entirely new platform with new electronics, new software, it's in cybersecurity. It's new wireless standards. We're seeing really good momentum with system standardization. That's one of the trends that we see as systems are looking at making decisions on their pumps. They want to standardize across the network. That's been the typical mechanism by which we gained share. We still continue to see that as a mechanism by which we gained share. Obviously, as the market leader, we're a logical place for them to consolidate to. And our teams are executing well. There've been a lot of pent-up excitement from our customers and a lot of pent-up excitement from our sales team to get their hands on Alaris. And the other thing I would say is we've shared that we've got the next submission going in by the end of the calendar year. That remains on track. Again, I was with that business last week. And that will include a number of new things like over-the-air software updates, new cybersecurity features and a number of other things to be beneficial to the customer.

So Tom, let me ask it another way. So there's -- we believe, and I think you agree there's a backlog, right, from the time during the ship hold. Is there anything that prevents you from being over like supply or staffing that prevent you from being over that $400 million run rate for a period of time?

No. And just kudos to our operations team have done a phenomenal job, did a gamble walk with the team last week there. And I mean they're producing, as we said, 2 is a record production quarter in the history of Alaris because remember, we're not only selling Alaris, but we're also replacing Alaris as part of the remediation. And so whatever we're selling, even though we're at historical rates, there's many, many more pumps being remediated at the same time. And the same thing happened in Q3, we set another record, right, in Q4 is basically going to be another production record. And so when you're going from cutting your production all the way down to the levels that we've been in the last several years to swinging it dramatically and maintaining excellent quality at that point the coordination from your supplier base to your manufacturing team has been phenomenal. We move manufacturing in the middle of that, actually. We move manufacturing as part of our BD Excellence strategy to new center of excellence for instrument manufacturing in Mexico. And so all the more just kudos to our team on how they're really executing that with excellence.

You're not blessing a number for fiscal '25, but there's nothing holding you back from like $400 million isn't the deal?

Still confident in our team in executing area manufacturing back a challenge.

All right. So turning to some of the other areas of the business. I want to just get start with China before we talk about the growth drivers.

Just a point we know how to do high volume manufacturing really well.

We know you do. But there's also staffing, right? I mean it's not easy besides manufacturing rates.

The location that we're at is actually -- we have no issue with that.

Good. Okay. So China, about 6% of BD revenue. I think sales have been down each of the last 4 quarters. We estimate year-to-date, China is down about 5% constant currency. What are the factors pressuring your sales? And what's the outlook for China?

Sure. What we see in China is very similar to what you're seeing across the industry from a number of peers. So there's really 2 factors. One are actions that the government is taking control costs. And that -- what fits into that bucket is value-based procurement, which is an approach they use, of course, directly on manufacturers and price bidding and then the second is anticorruption, which is a tactic that's used or with providers, which is, of course, value-based procurement is we want everyone to bid out, and we're going to disproportionately award tenders to those low prices. And the other one is going to physicians and they say, we think that you're doing too many procedures in these categories, and we're going to evaluate why you're doing those? Is it for your personal income? Or is it because of patient need. So you can see procedure volumes decline when they start pointing to specific areas and anticorruption. But they're overall 2 tactics that are used to manage right costs. And so we've seen, obviously, value-based procurement in our MDS business primarily has been the focus. We do expect that, that impact within MDS has peaked, but there can be value-based procurement, right, in any sectors of med tech, and that's something we monitor very closely. The other factors beyond price controls or cost containment actions from the government is just overall in life sciences. You've seen pretty much every life science company, just biotech spending down because of the economic challenges overall in China, which we still see to be real and relatively stable, I would say, meeting with our China team very recently. We're not seeing a macroeconomic upswing in China quite yet. We're looking forward to the stimulus as we go into '25. The timing of that still I wouldn't say able to nail down the exact timing of when the stimulus is going to be. Of course, past stimulus was let at a central government perspective. This stimulus is going to be managed more by specific provinces. And so may spread out over a longer period of time, but we do expect some stimulus in 2025, and that can have a benefit in the category, the extent and timing of which, particularly to be determined still.

Any prediction on when China turned positive for you?

Yes. I don't -- I think that the way to give some more guidance than that in November. In those markets that you don't have a control and that you're seeing macro factors, the best friend of proper predictions is time. And so we'll give a little more time.

Any concern that China is not kind of accretive to your growth going forward on a more mid-term basis?

I think over the mid- to long term, it's a huge market opportunity. We have a strong team there. We've got a great portfolio there and even as you look at those spaces where there's value-based procurement, we're seeing very strong volume growth in those categories. So we're seeing double-digit volume growth across most of our businesses in China. It's just you've got those pricing resets that are happening. And so as that works its way through the system, the fundamentals in China from that volume perspective are still very positive. It's still accretive from a margin perspective as well right now. So we're still bullish overall long term in China, but there's certainly market dynamics that China and local companies are going through. We're seeing a number of local companies going out of business. Of course, easier for a multinational with a broad portfolio to navigate some of these environments than it is if you have one product and your one product category is going through VBP that it's very challenging.

Got it. So let's talk about some of the other growth drivers aside from Alaris. Pharm Systems has been a great business for you. Some challenges this year. I think we have low single-digit growth in fiscal '24 for Pharm Systems. When can that business return to kind of normalized growth, which was, call it, high single digits.

High singles doubles there for a while. Yes, absolutely. Put it in perspective, since we really FY '19, we've grown Pharm Systems business over $800 million. It's been a phenomenal growth driver for us. We've talked -- let me focus on some of the things that have not stopped growing the entire time, and that's our biologics business, right? So today, 40% of our Pharm Systems business now biologics, we shared actually on the last earnings call that we expect GLP-1s to be a $1 billion opportunity for us, and we're certainly well on the trajectory towards that. We now have not only a number of the major blockbuster GLP-1s utilizing our devices. We've had a focused initiative over the last several years. You saw us right in the middle of the pandemic add over $1 billion of capacity in Pharm Systems as we look ahead and solve this as an opportunity. At that same time, we had a very focused initiative within our commercial team with a mantra that anyone coming in with the GLP-1, we want to be in our device, right? So we had a very focused thing, not only the commercial drugs that are there today on the market, but looking at who has new GLP-1s coming down the pipeline, making sure that we're appropriately positioning us to win those molecules. And then as we looked forward to biosimilars, we also, again, wanted to make sure that they were coming into our devices. And for biosimilars, not just coming into our high pack device, but coming into our auto injector and into our pen depending on the format. As we shared on the last earnings call, we now have over 40 GLP-1 biosimilar contracts signed with companies from around the world as those begin actually going into production runs as early as next year and then scaling over the back half of the decade. We have a number of the major next-generation GLPs that are working through the pipeline already signed in our product, and that's been driving double-digit growth in biologics. And every quarter, essentially, we've been right at that double-digit growth in Biologics this year as well. Underlying that, you do see destocking in the vaccine and the anticoagulant category, and you've seen that across the sector. I think even though we've been relatively flat year-to-date, every one of our peers, and we constantly are looking at the markets, right, peers are down mid-single digits. And so we're doing better than the industry overall. Same thing in biosciences, right, where we're flat industry down mid-single digits as you look at almost every peer that's something that we pay attention to very closely, right? Are we winning in every one of the segments that we're competing. And the answer, in those categories, is absolutely yes. So we're very bullish in the future of Pharm Systems. We'll need to watch the timing of when the anticoagulant and vaccine destocking works its way through, again, more when we get guidance in November.

And same for Biosciences, you touched on it a bit. It's been impacted by issues such as China. It's been flattish, I think, in 2024. Can that -- I'll push my luck here, can that business return to more normalized growth next year or when?

Again, I think you're going to see that with recovery in biopharma spending. And that's something I think about a number of the large life science companies. They're very focused on predicting. We've seen pretty much every one of the large life science companies down mid-single digits this year. Again, our business has been flat, pure players in the space down mid-single digits. Our business flat. So we're competing really well in that segment, driven by our FACSDiscover platform as well as new dies that we've been launching in our single cell platform. We have new launches continuing to move forward next year. And so we expect we'll continue to outperform the market growth. Pegging where the market is going to be from a recovery perspective. There's certainly good things from an interest rate changes can be beneficial in that space. I know we're seeing hiring start to pick up in some of the biotech sector as I talked to recruiters, et cetera, like who -- where's the funding starting to get trickled into, but more to come. We're not quite seeing -- we're not seeing certainly like a hockey stick at all. But over the last couple of quarters, if we look at our instrument placements within that sector, it's been moving up, but it's not a hockey stick, right? We're seeing it in numbers that I can count relatively, but it's certainly not handing downwards, heading in the right direction. At some point, there should be more of an inflection.

That's helpful. Tom, let's talk about 2025 a little bit more. So you gave some helpful color on the Q3 call. One area you didn't give much color on was kind of organic growth. You have a target -- you had a target in the past, I think, a 5.5% plus organic growth. This year, you're coming out, by our math, I think between 5% and 5.5%. Should we be thinking about maybe more like, call it, on the lower end, call it, 5% as a starting point for next year? Is that a better place to start?

Again, we'll give specific numbers on that in November. I would just say, we certainly expect to be mid-single digits. And the key factor is as we look at that is looking at the recovery timing specifically in the life science and Pharm Systems segment. Those are the 2 areas that we're watching closely and the timing of how we think those again times on one side to watch those market dynamics. In any of those scenarios, we expect to outperform the market growth, which we have been doing all year, and we expect to continue to do, it's really what the market growth is going to be in those.

That makes sense. And you also gave -- Chris, your CFO, gave good color on the fiscal Q3 call about '25 margins. I think you said the gross and operating margin should be similar next year to the 54.3% and the 25.2% that you posted in Q3. But that still would imply year-over-year growth in your margins right? And -- talk about your confidence in these figures, please?

Yes. Of course, everything we're making now is going into our cost structure for FY '25. It's about a 6-month lag between the two. And so we have good visibility into our gross margin as we only start the year, but as we go through. We feel very confident we've been communicating that for quite some time, our confidence in our 25% operating margin. And again, BD Excellence, the momentum and the systems that we have there are really what's driving our gross margin expansion, which is what's driving our op margin expansion. So we're at 25% Q3, we're going to be at 25% is our expectation again in Q4. Right? That bodes well for our continued momentum as we look into FY '25. And the other comment, of course, that we made on the Q3 call is that we also shared our outlook of 10% EPS growth as a good starting point for FY '25, that's unchanged.

Well, you preempted my next question. But just to kind of put a bow on that, I think that implies about [ $14.40 ] in EPS next year at 10%. Is that -- are people thinking about it the right way?

Yes. We think that's a good starting point.

That's helpful. And maybe, Tom, beyond fiscal '25, you have had a goal of double-digit EPS growth going forward. I know you're going to have an analyst meeting, Investor Day next year. What's your commitment to that going forward?

We'll -- you guys let us save something for Analyst Day. But we'll give an update on that at that point. We expect to continue to drive strong revenue performance -- strong mid-single-digit revenue performance driven by our innovation agenda and deployment of capital. Gross margin expansion, BD Excellence is still in early days, right, as you think about the deployment of these types of systems and capabilities in the company. We're just 1.5 years in the end of this year. You typically see maturity starting to hit at 7 years or so. So we're in early innings and the opportunity for that to positively impact gross margins. We'll share more on where we see gross margins going at Analyst Day, and that continue to drive strong leverage at EPS. First, we'll look at how much do we reinvest from an R&D perspective, et cetera. We expect to continue to drive strong leverage, strong mid-single-digit growth, and we'll share more at Analyst Day.

And price, Tom, BD is one of the few med tech companies that has positive pricing. I think year-to-date in fiscal '24 pricing has been about positive 1% ballpark. How are you thinking about pricing going forward for BD as a company?

Yes. We've shared that we expect -- so pre-pandemic, we were flat to slightly down each year. We certainly built systems and capabilities through the pandemic. We deployed -- we have a pricing function just like we have a regulatory or legal function. We have a pricing function at the company level, pricing experts in each of our business units. We have a software that we invested in that standardized across the company, [ Vendavo, ] that those professionals use to manage price. And so each one of our businesses has a positive price goal. And so we expect price to still be positive as we go forward into FY '25 and beyond. We've shared before, we expect it to be maybe similar to that range that you see this year, that 1%, 2% maybe closer to the one, especially as we look at China also offsetting with VBP in some way, but still net positive as we look at that. And we're keeping those systems. We're keeping those capabilities that's something that we see as a long-term positive for the company.

And Tom, circling back to a couple of growth drivers you touched upon earlier that I didn't have a chance to hit PureWick. You talked about it a lot. You've talked about it being a potential $1 billion franchise by 2030. But I don't think you've given us the kind of base how big it is now. So we can't judge how significant that is $1 billion in 2030.

It's meaningful. I mean it's -- I think I said on some calls, I think about like good small-cap companies that are presenting here, it's as big or bigger than those revenues, right, and growing very nicely. We're still in, let's say, we're heading towards mid-innings towards that $1 billion goal on PureWick. It's a phenomenal franchise for us. And I think what's exciting is, right, these are a number of things we've built through BD 2025. We talked about the $1 billion opportunity that we see and our trajectory on GLP-1s because of what we've done with capacity and our commercial focus that didn't exist at the start of BD 2025. It's now one of our biggest opportunities. Pharmacy automation didn't exist at the start of BD 2025. It's now one of our biggest growth drivers. PureWick was very small at the start of BD 2025. It's now very clearly in our sights as a $1 billion opportunity. A couple of things that we're doing to drive PureWick as we go forward. We just -- we launched male last year, which is the first application of PureWick in the male space. Again, clinicians I have met with last week, couldn't say enough amazing things about PureWick. If you ever want to just as something funny, maybe you don't do it on your work phone, is Google PureWick stickers. It's unbelievable. We have nothing to do with these stickers, but it just shows -- I do not think that you will find another product in med tech that nurses and clinicians literally love to the point that they dress up as PureWick for Halloween. And if you see the stickers that they buy because you'll see there's tons of different versions of it, clinicians just love this product. So the male is doing extremely well. We literally got to the point where it took off so fast. We had to pause selling to have another tranche of capacity. That capacity is now online. In July, we just opened up because our capacity expanded, we were able to open up male into the home setting. So that just went online where you can order Male PureWick online. We just launched our new Female PureWick last month. Starting to do trials there, but that's been very positively received. And then next year, we launched the first mobile PureWick. So PureWick has always been you either need to be in your bed at home or in a bed in a hospital, we have the first mobile version, which snaps on the back of a wheelchair, so people can be ambulatory, moving around with PureWick in public. We then have for the future years after, one that you could wear is a sling and walk around in communities or wherever you want to go. And so we really see an entire road map there. We also shared that we started our pivotal trial to be able to get reimbursement for PureWick. PureWick at home setting, while it sells very, very well, that's all out of pocket. There's no reimbursement unless we just recently had gotten there is reimbursement within the VA for those veterans can get reimbursed for PureWick at home. The rest of the communities do not. So we do have a clinical study underway to be able to seek reimbursement. That will be another catalyst over the next couple for that platform. So a lot of innovation and a lot of future opportunities.

That's helpful. Last one I wanted to ask about was the next-generation Pyxis, because that's a pretty big product for you guys. That's a second half calendar '25 launch? And how impactful could that be for you?

I'm excited by the next-gen Pyxis, something else [indiscernible] last week, San Diego. So I think about it as this -- first off, it's our first new hardware platform for Pyxis ever since we've bought CareFusion back in 2015. And so refreshed look, a number of new features on the hardware perhaps more exciting than the hardware is it's -- we've talked about it being cloud-connected. It's our first big scaled AI platform as well, too. And so as we think about the new platform, which we'll share more about at Analyst Day, it leverages pretty advanced AI capabilities that not -- will not only be used for Pyxis. We talk about our interconnected end-to-end medication management platform. This will be the first [indiscernible] platform that will go live -- the new AI platform [indiscernible] we will share more about that [indiscernible].

Maybe just thinking of it sounds like one of the near-term opportunities for you over the next couple of years there?

There will be -- overall there's [indiscernible] cure process, something that BD is extremely uniquely positioned and while people applying robotics [indiscernible] scale of BD applying to the underlying cure process, trying -- delivering medications, doing lab testing et cetera. And that's what we've been focused on. You've seen us using like biopharmacy automation, there will be leading franchise there. This will be the first component in a new suite where you're going to see us start upgrading all of our historical products, utilizing AI and some more advanced technologies on the hardware side to be able to make the next step-wise change for patients.

All right. Perfect. We're out of time. We covered a lot of ground.

Thanks so much.